New rules for military reservists’ compensation

Employers of Army reservists will soon be able to recover the full costs incurred if an employee is mobilised for full-time service, as new regulations come into effect from 14 April 2005.

Since January 2003 more than 11,000 reservists (from the Royal Naval Reserve, Royal Marines Reserve, Territorial Army and Royal Auxiliary Air Force) have been mobilised to support operations in Iraq and Afghanistan.

The new “Employers Award” replaces the current complex range of allowances that employers can claim, and will cover expenses incurred by an employer such as agency fees, costs of advertising for cover, overtime payments, or higher salary rates for temporary staff.

Although the award will be capped at £110 a day, this is expected to be sufficient to cover most claims.

David Frost, director general of the British Chambers of Commerce and a member of the Ministry of Defence’s National Employers Advisory Board, said: “The mobilisation of an employee is a difficult time for any business.

“The new financial arrangements will make claiming the costs much more straightforward for employers. They also provide a fairer reflection of the costs to an organisation of an employee being mobilised.”

Reservists will also benefit. Under the old scheme, pay was based on a reservist’s military rank with additional allowances available only if they could show that there would be hardship for them or their family. The new scheme means that a reservist’s civilian earnings will be matched up to a maximum of £200,000.

Employers of reservists who are currently mobilised can either continue to claim under the old system until the end of the mobilisation period, or transfer to the new arrangements.